Great Summary here by Denninger
Basically echoes a point I have made before – if you want a painful but short recession, don’t bail anyone out, don’t rescue anyone (think Panic of 1907 – it was a panic but notice the title – “of 1907” – only one year). If you want 10-20 years of economic malaise (at best – and hyperinflation/deflation/depression at worst) then have government types try to “steer” the economy (think US during GREAT DEPRESSION – 15+ years of government meddling caused by easy Fed credit beforehand).
Think of how foolish that thought is – trying to steer the American economy – do you really think that people in Washington, academics like Bernanke, or former slips and falls lawyers like half of Congress are qualified to steer the economy? I would argue no one is capable of such a task – and government is only capable of making mistakes trying. (furthermore, that group with so many favors to pay back, you know, would not do the right things with an open checkbook – point proven in 2008-2009)
So enjoy the fact that we didn’t crash deeper, but lament the fact that this grinding back and forth will likely be with us for a while – and for those of you not paying attention, outside of the home equity pop, most people have not progressed over the past 10 years. I blame the public emphasis on getting rich using assets and leverage, vs saving and working hard, as a major culprit.
